“Freddie — already propped up with $52 billion in taxpayer funds used to rescue the company from its own mistakes — recorded a loss of $6.7 billion and said it would require an additional $10.6 billion from taxpayers to shore up its financial position.” It goes on…”Some $130 billion in federal money had already been larded on both companies before Freddie’s latest request.”
Fannie Mae and Freddie Mac. If you are a regular reader you know I have mentioned them a lot over the years. Well they reported quarterly losses late last week but the number barely made a headline. Today in Gretchen Morgenson of the New York Times writes a front page article called “Ignoring the Elephant in the Room.”
Gretchen questions why more people are not talking about this situation, and I could not agree more. This two agencies are barely if at all mentioned when talking about financial reform, and for those who think government might be the answer when it comes to running financial institutions, I beg you to think again. The same Washington folks who thought Freddie and Fannie could do no wrong, like ever, are the ones leading the charge for too big to fail institutions that don’t include these two entities. It is nuts. It is scary and sad and nuts.
Ok on to the reason for the 1000 market crash. How is it possible that days later no one has a clue what caused this? ( “Origin of Scare on Wall Street Eludes Officials” NYT )Am I the only one out there that think this could have been an act of financial terrorism? If it was a ‘fat finger’ error how could officials not know from what institution the trade came? It just does not make sense and honestly, it is really frightening. First we had credit derivatives and synthetic CDOs as weapons of mass destruction and now this. We not only have to worry about dismantling physical bombs, but economic and financial ones as well? Capital markets, and especially stock exchanges, work because we have confidence in them. We assume that if you execute a trade in good faith it will be upheld. With what happened last week, including the cancelling of trades which occurred during the drop, it really makes me wonder what the heck is going on.
I think it is equally bizarre that they have no idea what caused the explosion on the oil rig and why NONE of the back-ups kicked in. I am not trying to get all Mel Gibson on you all but ….. Ok I know it is Mother’s Day. I need to lighten up.